Poundland feels the pressure of low costs

Thursday 07 January 2016 - Talya Misiri

Poundland has revealed that full year profits are likely to be at the lower end of the scale, as the high street suffered a decline in footfall despite encouraging sales at the end of 2015.

In the 13 weeks to 27 December, the discounter reported an increase of 29.4% in sales year on year. Its recent acquisition of 99p Stores also lifted profits to £424.9m. Existing Poundland stores contributed 9% including 3% from converted 99p stores. The newly purchased chain added 21.1% to its overall revenue.

Nonetheless, predictions were not met as a fall in footfall to its stores meant sales were negatively affected. As a result the business has lowered its forecasts, claiming that profits for the year to March are likely to be between £39.9m and £45.8m.

“Whilst our Christmas and Halloween product offer was our strongest ever and December saw an improvement in sales growth, UK high street footfall remained below last year and this has impacted our overall sales growth,” the firm said.

The value retailer was dependant on an improvement in the last six weeks as its third quarter results were disappointing.

"The trading conditions we experienced in November continued through the third quarter, with high street customer numbers down year on year and this has impacted sales growth" said Chief Executive Jim McCarthy.

“In addition, we remain on track to open around 70 net new Poundland and Dealz stores in the UK and Ireland in the full year.”